topic TurboTax rounded down my total tax due resulting in NJ Underpayment with interest penalty. in State tax filing

TurboTax rounded down my total tax due resulting in NJ Underpayment with interest penalty.

RoccoC — Thu, 04 Mar 2021 15:14:24 GMT

My 2018 NJ-1040X line 41 (Tax due on my NJ Taxable Income) was rounded down from $7,209.24 to $7,209.00. This resulted in a NJ underpayment penalty with a balance of $0.24 along with a ridiculous interest payment.

***EDIT***

The NJ underpayment had nothing to do with the $.24. Their notice form was very ambiguous. After talking with NJ Taxation office, the underpayment was late payment interest for a Changed 1099-R that I had received after the filing date. I still had balance due from the Changed 1099-R after the filing date, and am responsible to pay late payment interest.

Re: TurboTax rounded down my total tax due resulting in NJ Underpayment with interest penalty.

SteamTrain — Mon, 09 Nov 2020 19:28:08 GMT

I suspect (but can't know...depends on when you filed and paid the tax due on the NJ-1040X), that the underpayment penalty and interest is for the $7,209 that you probably paid late, and not the 24 cents itself (definition of ridiculous varies, depending on the person) . The 24cents may just be there as an add-in in case the penalty+interest+24cents adds up to a number that needs to be rounded to the next $. (NJ rounding rules for their main NJ-1040 forms say to add everything together first, and then round)

______________

If you did file and pay the 7,209 by the actual 2018 NJ tax due-date, then you may need to call the NJ tax folks, and see what they require of you...like pay the 24cents too, or round to an even $1, or was that a computer foul-up on their end....which has happened in the past..

Re: TurboTax rounded down my total tax due resulting in NJ Underpayment with interest penalty.

Critter-3 — Mon, 09 Nov 2020 22:08:04 GMT

Agreed ... the adding of the 24 cents to the underpayment penalty was just an "as long as we are sending you a letter we will add that on also" insult ... if all you owed was the 24 cents you would have never gotten a letter.

Re: TurboTax rounded down my total tax due resulting in NJ Underpayment with interest penalty.

fanfare — Wed, 11 Nov 2020 23:03:55 GMT

Did you copy/and or compile manually your TurboTax NJ results onto the NJ forms available on the NJ website?

That's the only way you could get an error in cents.

TurboTax forms for e-File or US Mail don't include cents. Everything is rounded to the nearest dollar.

Re: TurboTax rounded down my total tax due resulting in NJ Underpayment with interest penalty.

mjfkak — Mon, 28 Dec 2020 17:37:50 GMT

Same thing happened in Maryland. I just received a Tax Notice of a balance due. Here's the Break down

Balance Due for 2019 year...$1,667.27

Total payments, credits and offsets less previously issued funds...$1,667 (turbotax rounded down)

Interest for late payment of tax...$0.01

Interest for underpayment of estimated tax...$68.72

Total Balance Due...$69.00

This is all because of the $0.27 not paid. Does TurboTax pay for this?

*Edit* Form 502UP is offered but not suggested when TT knows taxes are owed? Wonderful.

I called Comptroller of MD and the $0.27 is included in the bill even with MD rounding because hey, why not tack on a few cents typically waived due to rounding when there's additional money due.

Re: TurboTax rounded down my total tax due resulting in NJ Underpayment with interest penalty.

SteamTrain — Sun, 27 Dec 2020 15:31:31 GMT

@mjfkak

Probably not something that TTX would pay for, since I suspect that is not for the 27 cents. MD allows rounding. From their tax instructions

"You may round off all cents to the nearest whole dollar. Fifty cents and above should be rounded to the next dollar. State calculations are rounded to the nearest cent."

_______________________________

Instead the critical statement on your tax bill would seem to be:

"Interest for underpayment of estimated tax...$68.72"

......and ( only a "maybe" ) they only added 1 cent for paying late?...even if it was one day late....but that one cent is immaterial to the total bill.

_________________________________________

If you owed MD more than $500 at tax time, then they assess interest on the payments you didn't make during the year...but should have......there was a form 502UP that MD allows you to prepare and file with your tax return, especially if the extra income and tax occurred during the last quarter of 2019....that form might have reduced the extra interest, but that would depend on your personal income situation during the year.

https://www.marylandtaxes.gov/forms/19_forms/502UP.pdf

That form is a part of the TTX software package, and TTX does allow you to prepare this form as a part of your tax filing, but many people skip it....which apparently you skipped.

https://www.marylandtaxes.gov/forms/19_forms/502UP.pdf

______________________

The critical statement on the MD tax instructions:

"UNDERPAYMENT OF ESTIMATED TAX
If you had income from which tax was not withheld or did not have enough tax withheld during the year, you may have owed an estimated tax. All taxpayers should refer to Form 502UP to determine if they owe interest because they underpaid estimated tax during the year.

If you owe interest, complete Form 502UP, write the amount of interest (line 18 of Form 502UP) and check the box on line 49 of Form 502. Attach Form 502UP.

Generally, you do not owe interest if:

a. you owe less than $500 tax on income that is not subject to Maryland withholding;
b. each current year payment, made quarterly as required, is equal to or more than one-fourth of 110% of last year’s tax, that was developed; OR
c. you made quarterly payments during the year that equal 90% of this year’s tax.

Special rules apply if your gross income from farming or fishing is at least two-thirds of your total estimated gross income. See Form 502UP for additional information and instructions for claiming this exemption from interest"

_____________________

That's on Page 17 of

https://www.marylandtaxes.gov/forms/19_forms/Resident_Booklet.pdf

Re: TurboTax rounded down my total tax due resulting in NJ Underpayment with interest penalty.

DoninGA — Sun, 27 Dec 2020 16:15:51 GMT

@mjfkak wrote:

Same thing happened in Maryland. I just received a Tax Notice of a balance due. Here's the Break down

Balance Due for 2019 year...$1,667.27

Total payments, credits and offsets less previously issued funds...$1,667 (turbotax rounded down)

Interest for late payment of tax...$0.01

Interest for underpayment of estimated tax...$68.72

Total Balance Due...$69.00

This is all because of the $0.27 not paid. Does TurboTax pay for this?

Call the phone number on the notice you received from the state and they will remove the penalty and interest. It is ridiculous that you would be charged an underpayment penalty and interest on the taxes paid.

The IRS and all States allow rounding on a tax return.

Re: TurboTax rounded down my total tax due resulting in NJ Underpayment with interest penalty.

Critter-3 — Sun, 27 Dec 2020 16:11:26 GMT

Agreed ... this is absurd and was sent automatically by a computer ... call the number and have a good laugh with the agent on the line as they fix this silliness OR mail in a response again stating the obvious rounding situation and request this be corrected.

Re: TurboTax rounded down my total tax due resulting in NJ Underpayment with interest penalty.

SteamTrain — Sun, 27 Dec 2020 17:57:52 GMT

......I still think y'all are focusing on the wrong thing.

He owed a balance due of $1667, which if far above the $500 MD has as one of the safe harbor situations MD allows for not owing underpayment interest. The one cent is just an annoyance, the main issue is the "underpayment" charge of $69 due to exceeding that $500 final bill....and apparently not attempting to minimize it with a form 502UP.

But the details of exactly when this user ( @mjfkak ) actually paid his final bill, and whether he prepared & filed a 502UP at all, have not been established, so the $69 bill may be entirely proper.

Re: TurboTax rounded down my total tax due resulting in NJ Underpayment with interest penalty.

Critter-3 — Sun, 27 Dec 2020 18:21:04 GMT

Crud ... you are correct ... that has nothing to do with the 27 Cents ... it is an underpayment penalty plus interest. There is nothing you can do about it but suck it up an pay it... they have you dead to rights. The program may have offered to calculate the penalty but the user declined as most will usually do.

Re: TurboTax rounded down my total tax due resulting in NJ Underpayment with interest penalty.

RoccoC — Thu, 04 Mar 2021 15:04:07 GMT

Thanks for everyone’s help. Edited my original message.